How Bitcoin stormed the temples of finance and banking

The inclusion in the 25th edition of the European Ambrosetti House workshop “The outlook for financial markets, for their governance and for finance” of a discussion about Bitcoin aroused quite a bit of curiosity. An unusual cross between tradition and innovation, given that the cryptocurrency which has always declared war on banks, presenting itself as an… Read more »

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The inclusion in the 25th edition of the European Ambrosetti House workshop “The outlook for financial markets, for their governance and for finance” of a discussion about Bitcoin aroused quite a bit of curiosity. An unusual cross between tradition and innovation, given that the cryptocurrency which has always declared war on banks, presenting itself as an anti-system payment system, was treated like an interesting phenomenon within the context of a reunion of the top leaders of finance and system bankers.

It is even more unusual considering what the economist Nouriel Roubini, one of the protagonists of this forum, had recently tweeted about the cryptocurrency: “Bitcoin isn’t a currency. It is btw a Ponzi game and a conduit for criminal/illegal activities. And it isn’t safe given hacking of it.”

This was a response to the recent events surrounding the bankruptcy of MtGox, the Japanese exchange platform that, at the time of the crash, was the third largest per volume for Bitcoin exchange. Along with its closure, 750,000 bitcoins belonging to thousands of users (plus 100,000 of the proprietors of the company itself) disappeared. In terms of real value, this loss is equivalent to about 473 million dollars (345 million euros). Roubini is convinced that Bitcoin had no future. No product, at this point, is priced in the cryptocurrency. And, he believes, never will be. The economist also commented on the excessive volatility of the currency, passing in one year from 14 dollars (January 2013) to almost 1,200 dollars (November 2013) and then crashing once again. He vented in another eloquent tweet: “Also given price volatility it is a lousy store of value”.

While one of the most illustrious economists present at the forum expressed himself in this way, during the “Young Leaders Meeting on Finance” workshop, on the other hand, Stefano Pepe, the founder and CEO of Bitquota and co-founder of Italian Bitcoin Foundation, explained to a group of curious young people what Bitcoin is and why it definitely has a future. It is necessary to think of Bitcoin (and other cryptocurrencies) as a type of complementary currency to those that are in circulation today. It is the money of Internet, online cash. An idea, a vision, or better yet, a preview of the world that is continuously more connected and decentralized that we live in today. Because what really counts, explained Stefano, when talking about Bitcoin, is not the money itself, as it is the protocol that is behind it and that generates it. The mathematics is a guarantee of a system that, in order to work, needs the trust and critical mass of users (which innovation doesn’t?). The sense that comes out of the Forum, the workshop, and following chatter is that it could acquire both, if the cryptocurrency were to be sponsored by an institution, a sort of Bitcoin bank (although this would take it away from its anti-system nature) or from an entire community, as has occurred in Sardinia with the Sardex currency.

So this is the provocation, by those who see Bitcoin not just as an easy way to make money but as a tool to form the future and to change it, and that a bitcoin paradise could soon exist just as fiscal paradises already exist or, why not, be the currency in areas that are considered anti-system. Thus, we could soon hear talk of a VenetoCoin or other forms of currency that is preferred to traditional ones. Because Bitcoin is anything but traditional. Anything but central. The protocol uses peer-to-peer technology to avoid all central authorities and banks; the management of transactions and the emission of bitcoins is done collectively online.Bitcoin is open source; its project is public, no one owns or controls Bitcoin and everyone can participate. Through some of its unique properties, Bitcoin offers exciting uses that were not covered by any other payment system before it.

It is too soon to say whether this is just fantasy. Or whether, as in Cernobbio – where heads of state, European leaders, ministers, Nobel prize winners, entrepreneurs, managers and experts from all over the world have been meeting since 1975 to discuss and compare notes on the global economy and society as a whole – the main discussion is about Bitcoin for the young economists of the future.